Grocery Stores Hungry for Small Store Fronts

Posted on July 16, 2019

It’s no surprise that the concept of quickly obtaining prepared foods and groceries has taken off with the growing demand of “on-the-go living”. People now want better quick food and grocery options, but so far, certain urban areas such as Detroit have been slow in implementing the right solution.

Traditionally, grocery needs are often scarce as a result of the limited amount of space available and demographic demand for full-blown grocery stores. Take, for instance, the history of the city of Detroit. In previous years, the only real option for Detroit resident’s everyday grocery needs was either gas station mini-marts, the few Save-A-Lots within the city limits or driving out of the downtown area to go to stores in the suburbs. Part of the luxury of living downtown is that many urban dwellers do not need cars for their work and pleasure activities, drawing even more attention to the lack of grocery choices in walkable distance.

Most available groceries are prepackaged or non-perishable items. Sure, one could argue that Eastern Market is available for shoppers to get fresh produce; yet, farmer’s markets are limited by their seasonal crops and vendor hours.

One significant challenge still remains for large grocers. Whether or not there are enough full-time residents in Detroit that warrants a need for a full store, which is why grocery stores are starting to get an appetite for smaller urban storefronts.

Thus, sparking the idea of ‘street concept’ markets, right in the heart of the downtown area. This idea of creating smaller scale stores offering fast casual items, fresh produce, and grab-and-go-meal options in urban locations.

Whole Foods Market set the stage by opening its doors to urban shoppers with its Midtown Detroit location neighboring Wayne State University, the DMC medical campus and Little Caesars Arena (to name a few). One of the first urban stores of its kind, Whole Foods entered the market with a smaller footprint than its Flagship Stores. Knowing Detroit had a need, but unsure how the city would react, the grocer opted for the more modest storefront with less parking. However, being it’s the first urban market to enter the 313 in decades, its success has been unwavering, resulting in Whole Foods searching for additional parking sites to meet consumer needs.

Whole Foods’ success has triggered several stores to open in the downtown area, including Michigan-based Plum Market. The upscale grocery has recently created a luxury solution for the downtown area with its 8,000-square-foot storefront located in the Ally Detroit Center, which opened just this month. This urban location is larger than their standard Plum Market Kitchen model (located at the Detroit Metropolitan Airport, Oakland University and Northwestern University north of Chicago) to accommodate the grocery need and expanded seating.

With the Whole Foods boom, rumors flew that Trader Joes was set to open in Corktown, but that was nothing but a spoof. In just the last few years, Meijer announced a smaller-format location on East Jefferson and Target has been searching for a smaller footprint to come to the city. However, the issue of space and limited parking remain roadblocks.

As eCommerce grocers such as Shipt, Instacart, Amazon, Walmart, and various home delivery services have become a welcome solution to this problem, larger grocers will need to continue to address the urban challenge to compete in these downtown areas. And at the rate their moving, Detroit’s shortage of fresh, fast and healthy food options should soon be an issue of the past.

Steven Silverman
Senior Vice President, Investment Advisory & Brokerage Services